1. Field of the Invention
The present invention relates to the field of investment and deposit funding, and more particularly to the computerized management of large deposits in Federal Deposit Insurance Corporation (FDIC) insured banks and savings institutions.
2. Description of the Related Art
Under United States banking law, a bank deposit is supported by the full faith and credit of the United States Government so long as the amount of the deposit in the bank does not exceed the Federal deposit insurance limit which is currently set at two-hundred and fifty thousand dollars ($250,000) through Dec. 31, 2013. The Federal Deposit Insurance Corporation (“FDIC”) is a federal governmental entity charged with implementing the foregoing guarantee by providing insurance for deposits in all Federal and State licensed banks and savings institutions in the United States.
The law and resulting administrative regulations governing the insurance of deposits within banking institutions provides FDIC s insurance coverage based on the concept of ownership rights and capacities. Specifically, funds held in different ownership categories are insured separately from each other, and funds of the same ownership but held in different accounts are subsumed under the same insurance coverage.
As a result of the limit of FDIC insurance at any one bank, investors holding funds that substantially exceed the FDIC insurance limit generally do not consider using bank deposits as an investment vehicle. In particular, the fact that larger amounts must be distributed across many different banks renders the exercise burdensome in merely opening the accounts and even more burdensome in maintaining control over and supervising the different accounts.
A network of managed deposit accounts at a multitude of FDIC insured financial institutions across the United States provides convenience to the investor by giving investors the ability to make a singled investment in the network with the administrator directing those funds to the a sufficient number of FDIC insured banks, limiting the amount at any one institution to no more than the FDIC insurance limit for each depositor, thus maintaining full FDIC insurance on all of the funds. For large investors, the alternative of investing in a traditional money market fund requires that the investor forego any United States guarantee and trust the judgment of the fund managers in selecting suitable investments since the investment vehicle is not FDIC insured.
Co-pending U.S. patent application Ser. No. 11/204,494 entitled “MANAGED DEPOSIT PROGRAM” describes a methodology, system and computer program product for achieving higher rates of return for investors while maintaining FDIC insurance for deposits that exceed $250,000. In this regard, as described therein, a network administrator agrees to a minimum level of deposits within certain preferred issuer banks in order to obtain higher rates of return on the funds committed to those preferred institutions. Insofar as the network administrator has the discretion to direct deposits to any issuer banks as long as no more than the FDIC Limit Amount is placed in any one issuer bank, then, when any depositor requests withdrawal of its funds, the network administrator has the ability to determine which banks are affected by such withdrawal and by executing a series of program algorithms the network administrator can logically manage and re-allocate ownership and distribution of funds originally placed in other issuer banks in order to ensure that the minimum agreed upon level of funds deposited at preferred issuer banks remains at the minimum agreed upon level despite the withdrawal requested by the depositor, and also achieving the highest rate of return on the funds remaining in the program.
Despite the convenience demonstrated by the technology disclosed in co-pending U.S. patent application Ser. No. 11/204,494, often times, investors seek an even higher rate of return than that offered by demand funds such as a money market account or a money market fund of money market accounts. Certificates of deposits and investment structures that include bank-issued certificates of deposit in the investment structure (collectively, “CD Products”) as a means to improve an investor's return will provide a unique and novel investment while enjoying the same FDIC insurance as demand funds up to the FDIC insurance limit of $250,000. However, as it is well known, CD Products involve limited liquidity throughout the term of the CD Product and funds can only be withdrawn in connection with a penalty paid by the withdrawing investor thereby defeating the enhanced investment rate offered by the CD Product unless that limitation is addressed in the process of creating a new product.